Moreland Commission calls for tougher penalties on utilities

Jan. 7, 2013

Written by

Jon Campbell

Albany Bureau

ALBANY — A state panel tasked with probing the state’s electric utilities knocked them as “natural monopolies” on Monday, calling for tougher penalties to be placed on those power companies with a poor performance record.

In a preliminary report unveiled Monday, the Moreland Act Commission said the state should create an easier way to revoke a utility’s certification while bolstering fines that can be levied on them.

The state panel was formed by Gov. Andrew Cuomo in November after Superstorm Sandy knocked out power for more than 2 million customers in the lower Hudson Valley, New York City and Long Island.

The private utilities operate “in their own exclusive service areas with no risk of losing all or part of the territory because of toothless government oversight,” according to the report.

The panel was created under the state Moreland Act, giving it broad subpoena powers. A total of seven power utilities were served with papers, according to the commission’s report, and 40 requests for information were sent out.

Benjamin Lawsky, the state Department of Financial Services superintendent and co-chairman of the Moreland Commission, said the panel recommends putting the Public Service Commission “on steroids,” in part by adding staff. The PSC regulates power providers, as well as other services provided by cable companies and telephone providers.

Specifically, the report recommends bolstering two major enforcement mechanisms: the amount of fines that can be levied on a utility and the ease in which their operating certificate can be pulled. As it stands, the Public Service Commission can levy fines of up to $100,000 total per day for all violations by a utility.

The report recommends fines of up to .02 percent of a company’s gross revenue, which would be up to $2 million a day for Consolidated Edison and $750,000 for National Grid, according to the Moreland Act Commission.

After receiving the report, Cuomo said he doesn’t believe state regulators have enough authority to truly oversee the utilities.

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“I don’t believe the (Public Service Commission) is really a regulator,” Cuomo said. “And I don’t believe these utilities are really regulated entities.”

In statement, Con Ed -- which provides power to much of New York City and southern Westchester County -- said it “looks forward to working with all parties to improve our storm operations.”

“Superstorm Sandy devastated our region, and all of us must participate in the discussions on infrastructure investments and new policies,” the company’s statement reads.

The bulk of the panel’s report focused on Long Island, where power is provided by the quasi-public Long Island Power Authority. The entity, set up during the days of former Gov. Mario Cuomo, was met with intense criticism in the days following the storm, when some customers went up to three weeks without power.

The commission recommended privatizing the authority, essentially selling it off to an investor-backed private utility. But with $7 billion in debt and $4 billion in assets, questions remained over how that gap would be bridged in a potential sale.

Cuomo said he requested the initial report in advance of his State of the State address, which is scheduled for Wednesday. Some of the recommendations could potentially be included in his speech, Cuomo said.

While Monday’s report focused largely on Sandy and downstate New York, the Moreland Commission will next turn its focus statewide, examining the response to tropical storms Lee and Irene in 2011.

Clayton Ellis, a spokesman for New York State Electric & Gas, said the company will “continue to cooperate with the Moreland Commission as its work continues.” NYSEG provides electricity to northern Westchester County, as well as parts of the Southern Tier and western New York.